How the First Home Scheme Works: A Guide for First-Time Buyers in Ireland

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Buying your first home is a milestone, but in today’s market, it can feel financially out of reach. Rising house prices, strict mortgage lending rules and high deposit requirements have made it especially challenging for new buyers. This is where the First Home Scheme offers a vital helping hand.

Designed to bridge the affordability gap, the First Home Scheme provides shared equity support for first-time buyers in Ireland. It is a government-backed initiative that enables buyers to purchase a home they might not otherwise afford, without taking on unmanageable debt.

In this guide, we explain how the First Home Scheme works, who qualifies, how much you can get, and how to apply effectively. If you are considering entering the housing market, this scheme might be the key to unlocking your new home.

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What Is the First Home Scheme?

The First Home Scheme Ireland is a shared equity scheme introduced by the Irish Government in 2022. It is aimed at first-time buyers and certain eligible applicants who are struggling to purchase a newly built home due to insufficient mortgage lending limits.

Through the scheme, the government (and participating banks) provide an equity stake of up to 30 percent of the property’s value. This equity is interest-free for the first five years and is only repaid when the property is sold, transferred or the buyer decides to buy back the equity.

Unlike a loan, there are no monthly repayments during the interest-free period, and you can buy out the government’s stake over time if your financial situation improves.

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Who Is Eligible for the First Home Scheme?

To access the First Home Scheme, you must meet certain eligibility criteria:

• You must be a first-time buyer or qualify under the Fresh Start principle (e.g., following separation or insolvency).
• You must be purchasing a newly built home in a private development.
• The property must be your principal private residence.
• You must take out a mortgage of at least 70 percent of the purchase price.
• Your combined mortgage and deposit must be insufficient to cover the full property price.
• The property price must not exceed regional price ceilings defined by the scheme.

The scheme is available for houses and apartments in new developments that are privately built, but not for second-hand or buy-to-let properties.

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How the First Home Scheme Works in Practice

Understanding the mechanics of this first-time buyer shared equity scheme helps you evaluate whether it is right for you. Here’s a simple breakdown:

1. Determine Affordability Gap
   If the purchase price of a new home exceeds the amount you can borrow plus your deposit, the First Home Scheme can cover the shortfall, up to 30 percent of the price (or 20 percent if used with the Help to Buy scheme).
2. Equity Share Provided
   The government takes a shared equity stake in your property. For example, if your home costs €350,000 and you receive €35,000 from the scheme, the State owns a 10 percent equity share.
3. No Immediate Repayment
   You do not need to repay the equity for the first five years. From year six, a low annual service charge applies unless you repay the equity share.
4. Voluntary Buy-Back Options
   You can buy out the State’s equity at any time, either partially or fully. Repayment amounts are based on the current market value of the property at the time of repayment.
5. End of Equity Stake
   If you sell, transfer ownership, or remortgage the property, the government’s stake must be repaid at that point, based on the market value.

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How Much Can You Get from the First Home Scheme?

The exact amount available depends on your financial shortfall. The maximum contribution is:

• 30 percent of the property price if you are not using the Help to Buy scheme
• 20 percent if you are using both schemes together

Let’s look at an example:

• Property price: €320,000
• Mortgage approval: €224,000
• Personal deposit: €16,000
• Shortfall: €80,000

In this case, the First Home Scheme could provide up to €64,000 (20 percent), assuming you are also using the Help to Buy scheme.

It is important to note that the amount offered cannot push your borrowing over the property’s full value. You must still meet lending and affordability criteria set by your bank.

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Regional Price Ceilings

The First Home Scheme has property price caps based on location and property type. For example:

• Greater Dublin Area:
  • Houses: €475,000
  • Apartments: €500,000
• Other regions have lower thresholds, typically ranging from €275,000 to €425,000

These caps ensure the scheme targets buyers struggling to access moderately priced homes, rather than those seeking luxury properties.

You can check current limits by visiting the First Home Scheme website or speaking with a participating lender.

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Advantages of the First Home Scheme

This scheme provides a number of significant benefits for first-time buyers:

• Bridges the affordability gap without increasing monthly mortgage costs
• No interest or repayments for the first five years
• Offers flexibility to buy back equity when your finances improve
• Helps buyers access new homes in desirable areas
• Can be combined with the Help to Buy scheme for greater support

For many buyers, the scheme makes the difference between continuing to rent and finally owning their own home.

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Things to Consider Before Applying

While the scheme is incredibly useful, there are a few key considerations:

• You are giving the government an equity share in your home
• Repayments after year six will apply if you do not buy out the equity
• The amount you repay will be based on the market value at the time, not the original equity amount
• There may be legal and valuation costs involved when buying back equity

Make sure to read the terms carefully and get independent financial advice if needed.

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How to Apply for the First Home Scheme

Applying for the scheme is straightforward when you follow the right steps. Here’s a guide on how to apply for First Home Scheme:

1. Check Your Eligibility
   Confirm that you meet the criteria and that your property qualifies under the regional price caps.
2. Apply Through the Portal
   Visit the official First Home Scheme website and create an online application.
3. Get a Mortgage Approval in Principle
   You’ll need a mortgage offer from a participating lender to proceed with your application.
4. Upload Required Documents
   Provide proof of income, mortgage details and property information.
5. Receive Approval
   Once approved, you’ll receive legal and financial documentation to review and sign.
6. Complete the Property Purchase
   The scheme funds will be transferred directly to the developer or solicitor during the closing process.

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Final Thoughts: Is the First Home Scheme Right for You?

The First Home Scheme is a well-structured support system for buyers who qualify but fall just short of the required deposit or loan amount. If you are a first-time buyer navigating the modern Irish property market, this shared equity scheme could be a game changer.

It offers flexibility, time to grow your finances, and access to homes that might otherwise be out of reach. While there are conditions to consider, many buyers find the benefits far outweigh the drawbacks.

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Ready to Start Your Property Search?

At FindQo.ie, we help first-time buyers in Ireland connect with trusted estate agents and find the right new-build properties. Whether you’re applying for the First Home Scheme or exploring other supports, we make the home buying process smoother.

Visit FindQo.ie to take the next step towards owning your first home.